The document discusses the Place of Provision of Service Rules, 2012 in India. Some key points:
- The rules determine where a service is considered consumed for taxation purposes and aim to avoid double taxation.
- There are 14 rules that cover specific service categories or provide default provisions. Rule 3 is the general default rule.
- The rules examine factors like the location of the service provider, receiver, place of performance to determine the place of provision.
- Examples are provided to illustrate how certain rules like rules 4, 5, 6, and 7 covering performance-based, immovable property related, event-related and multi-location services respectively would apply.
Asian American Pacific Islander Month DDSD 2024.pptx
Place of Provision of Service Rules, 2012
1. Ghalla & Bhansali, Chartered Accountants
1
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF
SERVICE RULES, 2012
BY RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
2. Ghalla & Bhansali, Chartered Accountants
Charging Section [Section 66B]
2
PRESENTATION BY - RAJ MUKESH KHONA
Service Tax shall be
levied on
Value of all services
Provided or agreed to
be provided
In a taxable territory
Other than services
specified in negative list
PLACE OF PROVISION OF SERVICE RULES, 2012
3. Ghalla & Bhansali, Chartered Accountants
What is Taxable Territory?
Taxable Territory has been defined in section 65B(52) as a territory to
which provisions of Chapter V of Finance Act, 1994 apply.
As per Section 64(1) of the Finance Act, 1994 provisions of Chapter V of
Finance Act, 1994 extends to the whole of India except the state of Jammu
& Kashmir.
Thus, Jammu & Kashmir is a non-taxable territory.
3
PRESENTATION BY - RAJ MUKESH KHONA
India J & K
Taxable
Territory
PLACE OF PROVISION OF SERVICE RULES, 2012
4. Ghalla & Bhansali, Chartered Accountants
What is India?
4
PRESENTATION BY - RAJ MUKESH KHONA
Land
Part
Territorial
Waters
(12nms)
Exclusive
Economic
Zone
(200nms)
India
Air Space,
Water, Sea
Bed
Continental
Shelf and Oil
Rigs
PLACE OF PROVISION OF SERVICE RULES, 2012
5. Ghalla & Bhansali, Chartered Accountants
Helicopter View - Charging Section
5
PRESENTATION BY - RAJ MUKESH KHONA
Service Tax
shall be
levied @
Basic Rate of
14%
Gate No.1
(Entry)
Gate No.2
(Exit)
Gate No.4
Gate No.5
(Exit)
Gate No.3
(Exit)
Other than Negative
Listed Services
Provided / agreed to be
provided in Taxable
Territory
By one person to
another person and
collected in prescribed
manner
Exempted Services
Value of All Services
As per POT
Rules, 2011
and STR,
1994
19 Specified
Services
Determined
as per
POPOS
Rules, 2012
As per MEN
25/2012-ST
PLACE OF PROVISION OF SERVICE RULES, 2012
6. Ghalla & Bhansali, Chartered Accountants
Test to Determine a Taxable Service
6
PRESENTATION BY - RAJ MUKESH KHONA
Doing an activity
including activity
under Declared
Service?
Doing such
activity for
Consideration?
Does this activity
consist only of
transfer of title in
goods or
immovable
property?
Is this activity
considered as
deemed sales?
Is service
performed by MP,
MLA or MLC?
Is the
consideration for
the activity in the
nature of fees for
a court or
tribunal?
Is such an activity
in the nature of
service provided
by employee in
course of
employment?
Does this activity
consists only of a
transaction in
money or
actionable claim?
Considered
as a Service
Service Provided
or Agreed to be
provided in
Taxable Territory
Service does not
fall in Negative
List
Service is a
Taxable
Service
Yes Yes No
No
NoNoNo
Yes Yes Yes
No
PLACE OF PROVISION OF SERVICE RULES, 2012
7. Ghalla & Bhansali, Chartered Accountants
Introduction to POPOS Rules, 2012
7
PRESENTATION BY - RAJ MUKESH KHONA
Service tax is a destination based consumption tax.
Services to be taxed in the place of their consumption.
Challenge to ascertain the place of consumption of services. Reasons being –
- Intangible nature of services.
- Non availability of exact location of service receivers.
- Existence of variety of services.
- Multiple mechanisms to deliver / render services.
Hence, need for deeming provisions to determine exact place of consumption
of service aroused.
Accordingly, Central Government has introduced Place of Provision of
Service Rules, 2012 vide Notification No. 28/2012-S.T. dated 20-06-2012 for
the purpose of determination of the place of provision of services.
PLACE OF PROVISION OF SERVICE RULES, 2012
8. Ghalla & Bhansali, Chartered Accountants
Relevance of POPOS Rules, 2012
8
PRESENTATION BY - RAJ MUKESH KHONA
Taxation of cross-border services
Taxation of services provided to & from Jammu and Kashmir
Taxation of services provided to & from SEZs, to avail exemptions
Taxation of services provided from multiple locations
Harmonization with international practices, avoid double taxation &
ensure that no service is left untaxed
PLACE OF PROVISION OF SERVICE RULES, 2012
9. Ghalla & Bhansali, Chartered Accountants
Framework of POPOS Rules, 2012
9
PRESENTATION BY - RAJ MUKESH KHONA
Central
Government
empowered to notify
rules u/s 66C for
determining POP of
service.
Simple set of 14
Rules notified by
the Central
Government vide
Notification No.
28/2012-S.T. dated
20-06-2012.
Statutory
Provisions
POP of service is in
taxable territory.
‘Service is
taxable’
POP of service is in
non-taxable
territory.
‘Service is not
taxable’
Basic
Philosophy
PLACE OF PROVISION OF SERVICE RULES, 2012
10. Ghalla & Bhansali, Chartered Accountants
Determination of Location of Service
Provider and Service Receiver
10
PRESENTATION BY - RAJ MUKESH KHONA
Whether registered in
India? (Single or
Centralized)
Whether person has a
business establishment in
India?
Whether person has a fixed
establishment in India?
Registered Location in
India
Whether person has a fixed
establishment abroad?
Whether person has
another fixed
establishment
abroad?
Location will be the
establishment most directly
concerned
Location will be the
Business Establishment
Location will be the
establishment most directly
concerned
Location will be the Fixed
Establishment in India
Whether person has usual
place of residence in India?
Location in India
Y
N
N
N
Y
Y
Y
Y
Y
N
N
Place of Residence abroadN
PLACE OF PROVISION OF SERVICE RULES, 2012
11. Ghalla & Bhansali, Chartered Accountants
Understanding Key Terms
11
PRESENTATION BY - RAJ MUKESH KHONA
Business
Establishment
Place where essential decisions & functions
concerning the general management of the
business are taken and carried out.
For instance, head office, factory, shop or retail
outlet.
There is only one business establishment that a
service provider or service receiver can have.
Fixed
Establishment
Place (other than the business establishment)
which has the permanent presence of human and
technical resources to provide / receive a service.
In a nutshell, three P’s determine a ‘fixed
establishment’: (i) place (ii) people (iii) with a degree
of ‘permanence’.
Temporary presence of staff by way of a short visit
at a place cannot be called a fixed establishment.
PLACE OF PROVISION OF SERVICE RULES, 2012
12. Ghalla & Bhansali, Chartered Accountants
Understanding Key Terms
12
PRESENTATION BY - RAJ MUKESH KHONA
Usual Place of
Residence
In case of Body Corporate – Place of Incorporation.
In case of Individual – Place where he & his family
resides.
In case of Telecommunication Service - Billing
Address of service receiver.
Establishment
most directly
concerned
Determination of which establishment is most
directly concerned with the provision of service shall
depend upon facts and supporting documents of
each case.
Following aspects should be considered -
- Invoice / Contract / Payment
- Debit to Accounts (Bearing of Cost)
- Actual Performance/Consumption of the Service
PLACE OF PROVISION OF SERVICE RULES, 2012
13. Ghalla & Bhansali, Chartered Accountants
Grouping the POPOS Rules, 2012
13
PRESENTATION BY - RAJ MUKESH KHONA
Specific
Rules
General
Rule
Other
Aspects
PLACE OF PROVISION OF SERVICE RULES, 2012
14. Ghalla & Bhansali, Chartered Accountants
Order of Applicability of Rules
Rule 14: Tie Breaker Rule
14
PRESENTATION BY - RAJ MUKESH KHONA
If a service
falls
Under
more than
one rule
Later Rule
to apply
PLACE OF PROVISION OF SERVICE RULES, 2012
15. Ghalla & Bhansali, Chartered Accountants
Rule 3: General / Default / Main Rule
15
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
All services which are not
falling in the specific rules
4 to 12
Location of Service
Receiver
• Consultancy Services
• Auditing Services by C.A.
Service Description Place of Provision Illustrative list of services
Where location of service
receiver is not available in
the ordinary course of
business
Location of Service
Provider
• Restaurant Service
• Services of Palmist
Exception to Rule 3
In nutshell, unless otherwise specified, in case of:
- B2B Transactions - PoP shall be location of service receiver
- B2C Transactions - PoP shall be location of service provider
PLACE OF PROVISION OF SERVICE RULES, 2012
16. Ghalla & Bhansali, Chartered Accountants
Pictorial Depiction of Rule 3
16
PRESENTATION BY - RAJ MUKESH KHONA
ABC
Service Provider
DEF
Service Receiver
XYZ
Service Provider
PQR
Service Receiver
Taxable Territory Non Taxable Territory
T
T
NT
T = Taxable NT = Not Taxable
PLACE OF PROVISION OF SERVICE RULES, 2012
17. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
17
PRESENTATION BY - RAJ MUKESH KHONA
Mr. Akshay
USA
India
Mr. Anurag
Provides Consultancy Service
PLACE OF PROVISION OF SERVICE RULES, 2012
18. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
18
PRESENTATION BY - RAJ MUKESH KHONA
Mr. Yogesh
China
India
Taj Hotel
Comes to India for Holiday
Restaurant Services
Exception to
Rule 3
PLACE OF PROVISION OF SERVICE RULES, 2012
19. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
19
PRESENTATION BY - RAJ MUKESH KHONA
Mr. Siddhant
Bangladesh
India
Ms. Pooja
Provides Service of Palmist Exception to
Rule 3
PLACE OF PROVISION OF SERVICE RULES, 2012
20. Ghalla & Bhansali, Chartered Accountants
Rule 4: Performance Based Services
20
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
a) Work upon Goods
Services performed on
goods made physically
available by the recipient
to service provider or
person acting on his
behalf
Location where
services are actually
performed
• Repairs & Maintenance
• Technical Testing
• Dry Cleaning
b) Work upon
Individuals
Services performed on
individuals which require
physical presence of
service receiver or person
acting on his behalf
• Cosmetic Surgery
• Beauty Treatment
• Classroom Teaching
PLACE OF PROVISION OF SERVICE RULES, 2012
21. Ghalla & Bhansali, Chartered Accountants
Rule 4: Performance Based Services
21
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
Services provided
electronically from a
remote location
Location of goods at
the time of
provision of service
• Repair or Maintenance of
software through team-viewer
Services provided in
respect of goods
temporarily imported
into India for repairs
and are exported after
the repairs without
being put to any use in
the taxable territory,
other than that which
is required for such
repair
Location of Service
Receiver
Rule 4 shall not be
applicable
i.e. Rule 3 shall be
applicable
• Foreign Aircraft / Machinery
brought into India for repair
& exported w/o being put to
use in taxable territory
Exception to Rule 4 (a) – Work upon Goods
PLACE OF PROVISION OF SERVICE RULES, 2012
22. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
22
PRESENTATION BY - RAJ MUKESH KHONA
Machinery of
USA based Co.
USA
India
Mr. Aditya
Goes to USA to repair the machinery
PLACE OF PROVISION OF SERVICE RULES, 2012
23. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
23
PRESENTATION BY - RAJ MUKESH KHONA
Pooh Beauty
Parlour
USA
India
Ms. Palak
Ms. Palak
Goes to USA
Beauty Treatment
PLACE OF PROVISION OF SERVICE RULES, 2012
24. Ghalla & Bhansali, Chartered Accountants
Rule 5: Services Relating to Immovable
Property
24
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
Services directly
related to Immovable
Property
Place where the
immovable property
is actually located or
intended to be
located
• Real Estate Agent
• Renting / Leasing
• Architect and Civil Engineers
• Hotel Accommodation
• Interior Decorator
Points for Ponder:
Rule 5 not applicable if there is only an indirect relation with the
immovable property. For example – Tax Consultancy, Financing Services
in relation to Immovable Property
PLACE OF PROVISION OF SERVICE RULES, 2012
25. Ghalla & Bhansali, Chartered Accountants
Rule 6: Services Related to Events
25
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
Services provided by
way of:
• Admission to event
• Organization of event
• Services ancillary to
admission or
organisation of event
Place where the
event is actually held
[Events can be
Cultural, Artistic,
Sporting, Scientific,
Educational or
Entertainment]
• Event Management
Services for a Fashion
Show
• Sound engineering services
for Arijit Singh Concert
PLACE OF PROVISION OF SERVICE RULES, 2012
26. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
26
PRESENTATION BY - RAJ MUKESH KHONA
Canadian Event
Organizer
USA
India
Indian Fashion
Design Firm
Fashion Show
Hosts a
show
Event Management Service
PLACE OF PROVISION OF SERVICE RULES, 2012
27. Ghalla & Bhansali, Chartered Accountants
Rule 7: Services provided at Multiple
Locations
27
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision
Services provided at more
than one location,
including a taxable
territory (overrides Rule 4,
5 & 6)
Location in the taxable territory where greatest
proportion of the service is provided
PLACE OF PROVISION OF SERVICE RULES, 2012
28. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
28
PRESENTATION BY - RAJ MUKESH KHONA
ABC Ltd
India
Sri Lanka
PQR Ltd
Technical inspection services of a product
40%
25%
20%
15%
Colombo
Mumbai
Goa
Jaipur
PLACE OF PROVISION OF SERVICE RULES, 2012
29. Ghalla & Bhansali, Chartered Accountants
Rule 8: Service Provider and Service
Receiver both in Taxable Territory
29
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision
Situations when both service
provider and receiver are located in a
taxable territory
Location of Service Receiver
Location of SP Location of SR PoP as per R.4 - 6 PoP as per R.8
Taxable
Territory
Taxable Territory Non Taxable
territory
Location of SR
Non Taxable
territory
Non Taxable
territory
Taxable Territory Exempt as per
Entry No. 34(c) of
Mega Exemption
Notification
Analysis of Rule 8
PLACE OF PROVISION OF SERVICE RULES, 2012
30. Ghalla & Bhansali, Chartered Accountants
Krutika
Aeronautics Ltd
Nepal
India
Pawan Hans Ltd
Helicopter repair services
Nepal
Lets understand with an example
30
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
31. Ghalla & Bhansali, Chartered Accountants
Krutika
Aeronautics
Ltd
Nepal
India
Pawan Hans Ltd
Helicopter repair services
Sikkim
Lets understand with an example
31
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
Service would be Exempt by virtue of Entry No. 34 of Mega
Exemption Notification No. 25/2012-ST dated 20.06.2012.
32. Ghalla & Bhansali, Chartered Accountants
Rule 9: Specified Services
32
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
Services provided by a
banking company,
financial institution or a
non-banking financial
company to an ‘account
holder’
Location of Service
Provider
Services of operating bank
accounts, safe deposit
lockers, RTGS, NEFT, E-
payment
Online information and
database access or
retrieval services
E-Books, E-Journals /
Magazines, E-Weather
Reports
Hiring of means of
transport other than
aircraft and vessels except
yachts, upto one month
Hiring of motorcars, bus,
trucks, yachts upto one
month.
Intermediary Services Travel agent, Commission
Agent (for goods & services)
PLACE OF PROVISION OF SERVICE RULES, 2012
33. Ghalla & Bhansali, Chartered Accountants
Services of Banks, Financial
Institutions, NBFC’s to Account Holders
33
PRESENTATION BY - RAJ MUKESH KHONA
Services to Place of Provision
Account Holders Location of Service Provider
Non – Account Holders Location of Service Receiver
(Rule 3 shall be applicable)
Points to Ponder
The Education Guide has clarified as follows-
Services to Account Holders - Operation of bank accounts, transfer of
money, lending, Safe Deposit Lockers, E-Payment, NEFT, RTGS
Services to Non-Account Holders - Issue of Demand Draft, Merchant
Banking Services, Portfolio Management Services, Transaction
Advisory Services
PLACE OF PROVISION OF SERVICE RULES, 2012
34. Ghalla & Bhansali, Chartered Accountants
Online Information and Database Access
or Retrieval Services
34
PRESENTATION BY - RAJ MUKESH KHONA
Forbes
E-Magazine
USA
India
Ms. Alka
Pays subscription charges to
access & download magazine
PLACE OF PROVISION OF SERVICE RULES, 2012
35. Ghalla & Bhansali, Chartered Accountants
Intermediary Services
35
PRESENTATION BY - RAJ MUKESH KHONA
Mr. Prathamesh
USA
India
Reliance
Industries Ltd
Provides export promotion / marketing
services & receives export commission for
getting export order
Intermediary means ‘a broker, an agent or any other person who arranges or
facilitates provision of services or supply of goods between two or more persons,
but does not include a person who provides the main service or supplies the goods
on his own account.’
PLACE OF PROVISION OF SERVICE RULES, 2012
36. Ghalla & Bhansali, Chartered Accountants
Adani Ltd
(Owner of Oil
Tanker)
Dubai
India
Ibrahim Ltd
(Dubai)
Hires Oil Tanker for 22 days
Hiring of Means of Transport
36
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
37. Ghalla & Bhansali, Chartered Accountants
Adani Ltd
(Owner of Oil
Tanker)
Dubai
India
Ibrahim Ltd
(Dubai)
Hires Oil Tanker for 60 days
Hiring of Means of Transport
37
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
38. Ghalla & Bhansali, Chartered Accountants
Adani Ltd
(Owner of
Aircraft)
Dubai
India
Ibrahim Ltd
Hires Aircraft for 25 days
Hiring of Means of Transport
38
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
39. Ghalla & Bhansali, Chartered Accountants
Adani Ltd
(Owner of
Yacht)
Dubai
India
Ibrahim Ltd
Hires Yacht for 25 days
Hiring of Means of Transport
39
PRESENTATION BY - RAJ MUKESH KHONA
PLACE OF PROVISION OF SERVICE RULES, 2012
40. Ghalla & Bhansali, Chartered Accountants
Rule 10 : Goods Transportation Services
40
PRESENTATION BY - RAJ MUKESH KHONA
Service
Description
Place of Provision Illustrative list of services
Transportation of
goods by any mode
(air, rail, road, sea)
except by way of
courier or mail
Destination of Goods All types of freight
Transportation of
Goods by road by
Goods Transport
Agency
Location of person
liable to pay tax
Note: Covered in Reverse
Charge Mechanism
PLACE OF PROVISION OF SERVICE RULES, 2012
41. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
41
PRESENTATION BY - RAJ MUKESH KHONA
Scenarios Ocean / Air Rail / Road
Transportation of goods from
India to outside India
PoP = Outside India (not
taxable)
PoP = Outside India
(not taxable)
Transportation of goods from
outside India to India
PoP = India
(not taxable as per
negative list)
PoP = India
(taxable)
Transportation of goods within
India (From J&K to a taxable
territory)
PoP = India
(taxable)
PoP = India
(taxable)
Transportation of goods within
India (from taxable territory to
J&K)
PoP = J & K
(not taxable)
PoP = J & K
(not taxable)
PLACE OF PROVISION OF SERVICE RULES, 2012
42. Ghalla & Bhansali, Chartered Accountants
Rule 11 : Passenger Transport Services
42
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
Passenger Transport
Services
Place where the
passenger embarks
on the conveyance
for a ‘continuous
journey’
Air Travel, Road Travel, Water
Travel, Rail Travel
PLACE OF PROVISION OF SERVICE RULES, 2012
43. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
43
PRESENTATION BY - RAJ MUKESH KHONA
Journey from one place to another
Journey with halts at various places
Delhi London
Delhi London
London New Jersey
New Jersey Delhi
Day 1
Day 5
Day 8
PLACE OF PROVISION OF SERVICE RULES, 2012
44. Ghalla & Bhansali, Chartered Accountants
Rule 12 : Services Provided On Board A
Conveyance
44
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision Illustrative list of services
Services provided on
board a conveyance
(bus, train, vessel,
aircraft) during the
course of passenger
transport operation
First scheduled
point of departure of
that conveyance
• Beauty Treatment on board
• Video Games on board
• Catering Services on board
Note: This Rule covers on board services only if provided for specific
charge i.e.; value should not be included in fare.
PLACE OF PROVISION OF SERVICE RULES, 2012
45. Ghalla & Bhansali, Chartered Accountants
Lets understand with an example
45
PRESENTATION BY - RAJ MUKESH KHONA
Dubai MumbaiBengaluru
Catering
Service
Dubai MumbaiBengaluru
Catering
Service
PLACE OF PROVISION OF SERVICE RULES, 2012
46. Ghalla & Bhansali, Chartered Accountants
Rule 13 : Power of Central Government
to notify further Rules
46
PRESENTATION BY - RAJ MUKESH KHONA
Service Description Place of Provision
Power of Central Government to notify
any description of service or
circumstances
Place of effective use and enjoyment
of service
PLACE OF PROVISION OF SERVICE RULES, 2012
47. Ghalla & Bhansali, Chartered Accountants
Snapshots of POPOS Rules, 2012
47
PRESENTATION BY - RAJ MUKESH KHONA
General Rule
B2B Transaction
B2C Transaction
Specific Rules
• Performance Based Rule
• Property Rule
• Event Rule
• Rule for Specified
Services
• Transportation Rule for:
- Goods
- Passengers
• Rule for services
provided on board any
conveyance
Other Aspects
• Rule for services
provided at
multiple locations
• Rule for Services
provided in N.T.T.
when both S.P. and
S.R. are in T.T.
• Tie Breaker Rule
PLACE OF PROVISION OF SERVICE RULES, 2012
48. Ghalla & Bhansali, Chartered Accountants
Taxability of Service Depends on -
48
PRESENTATION BY - RAJ MUKESH KHONA
Location of Service Provider
Location of Service Receiver
Place of Provision of Service
Proxy
Rule
Main
Rule
PLACE OF PROVISION OF SERVICE RULES, 2012
49. Ghalla & Bhansali, Chartered Accountants
49
PRESENTATION BY - RAJ MUKESH KHONA
Presentation by : Raj Mukesh Khona
Reach me at : rajkhona1@gmail.com
Connect with me on : Linked In | Facebook | Twitter
PLACE OF PROVISION OF SERVICE RULES, 2012
Editor's Notes
TWI – 12 Nautical Miles from Indian Land Mass
EEZ – 200 Nautical Miles from Indian Land Mass
Exempted Services are taxable services. However, S.T. is not payable on such services as it exempted as per E/N.
Export of service not charged to tax – as the consumption is outside the taxable territory
Import of service charged to tax – as the consumption is in the taxable territory
14 rules – we subdivide them into 3 parts
The basic rule is that the place of provision of service shall be the location of the service receiver. However, exceptions have been provided
in case of performance based services, immovable property based services, certain specified services and transportation service etc. where other criteria such as location of service provider, location of performance of service, etc. are relevant.
S.P. not required to make extraordinary efforts to address of S.R.
Physical Presence of Goods or Individuals (S.R.) is essential
Ancillary services are those for which S.R. is not specifically charged.
In simple words, if a small portion of any service specified in rule 4, 5 & 6 is provided in taxable territory and major portion is provided in non-taxable territory, then also the entire service becomes taxable in India. The only solution to counter such situations as explained by CBEC itself is that separate invoices be raised in respect of each identified PoP of service.
The place of provision of helicopter repair services performed in Nepal would be Nepal (i.e. non-taxable territory) by virtue of rule 4. But if the service provider and the service receiver are located in India (e.g. Krutika Aeronautics Ltd. – the service provider and Pawar Hans Ltd. – the service recipient) the services would be considered as provided in India (in the taxable territory), notwithstanding rule 4.
This service would be exempt from service tax due to Notification no. 25/2012-ST dated 20.06.2012.
Oil Tanker is stationed at a port in Dubai.
Oil Tanker is stationed at a port in Dubai.
Oil Tanker is stationed at a port in Dubai.
Oil Tanker is stationed at a port in Dubai.
14 rules – we subdivide them into 3 parts
The basic rule is that the place of provision of service shall be the location of the service receiver. However, exceptions have been provided
in case of performance based services, immovable property based services, certain specified services and transportation service etc. where other criteria such as location of service provider, location of performance of service, etc. are relevant.
With this it is clear that even though the taxability of service under service tax law heavily depends upon place of consumption of service, location of service receiver and service provider also play an important role in determining the place of provision of service.
The Education Guide clarifies ‘nearest ‘proxies’ are adopted to provide specificity in the interpretation as well as application of the law.’
Services being intangible, the provision thereof is volatile and transient. Determining the location of the service provider and service recipient maybe possible with better precision as against the place of provision of service. Hence the location of the service provider and service recipient are used as proxies. Further, location of the service provider and service recipient determined pursuant to the PoP Rules and Explanation 3(b) to section 65B(44) is very crucial to determine the place of provision of the service. Infact in many cases it would be where the service provider or service recipient is located and not where the service is provided or utilised.
The location of service provider and location of service recipient has been defined separately in rule 2 of POP Rules